State v. Lloyd

• Decision Date: 25 May 1928
• Docket Number: No. 28688.,28688.
• Citation: 7 S.W.2d 344
• Parties: THE STATE, Appellant, v. M.W. LLOYD.
• Court: Missouri Supreme Court

7 S.W.2d 344

THE STATE, Appellant, v. M.W. LLOYD.

No. 28688.

Supreme Court of Missouri, Division Two.

May 25, 1928.

Appeal from Stoddard Circuit Court. — Hon. E.M. Dearing, Judge.

AFFIRMED.

North T. Gentry, Attorney-General, and David P. James, Assistant Attorney-General, for appellant; James V. Billings of counsel.

(1) The information plainly shows that Subdivision 8 of Section 11740 is referred to therein, and clearly charges the offense. This subdivision is, by Section 3420-5, made the standard and measure by which loans to bank officers are regulated. It sets the amount above which loans to officers of the bank cannot be made, unless the consent of the directors is a matter of record, without committing a felony. The statutes are full of instances where, by reference, one section is incorporated within another. "Every presumption is to be indulged in favor of the validity of an act enacted by the General Assembly, and that presumption is to continue until invalidity is made apparent beyond a doubt." State ex rel. McCaffrey v. Aloe, 152 Mo. 466; State v. Distilling Co., 236 Mo. 244; Kusnetzky v. Security Insurance Co., 281 S.W. 47; State ex rel. Sekyra v. Schmoll, 282 S.W. 702. (2) Respondent's contention that Subdivision 8 of Section 11740 was repealed and a new subdivision enacted, making this proceeding in the trial court void, is without merit. The indictment was filed in December, 1926, the prosecution was instituted before the Act of 1927 was passed, and was pending when said act became effective. Secs. 3709, 7064, 7065, R.S. 1919. (3) The defendant, in effect, claims that the provisions of Subdivision 8 of Section 11740, requiring loans to bank officials in excess of ten per cent of the capital and surplus of the bank be made a matter of record, is but directory and not mandatory. This machinery was created as a protection to the bank and its creditors and not for the benefit and use of the borrower and his brother officers. Not only is the consent of the majority of the board of directors necessary, but a record of such consent is required. The making of this record was a statutory duty of the defendant and his associates. Sec. 11740, par. 8, R.S. 1919; Secs. 3420-5, Laws 1925, p. 190; People v. Knapp, 99 N.E. (N.Y.) 841.

Orville Zimmerman, L.R. Jones, Ely & Ely and B.A. McKay for respondent.

(1) If Subdivision 8 of Section 11740, R.S. 1919, be held to become by reference a part of Section 3420-5 of the Laws of 1925, the section upon which the information is based, then Section 3420-5 is unconstitutional and violative of Section 28 of Article 11 of the Constitution, because the title to the act (Laws 1925, p. 190) refers to "Providing Punishment for Officers and Employees of Banks and Trust Companies Making Excessive Loans," while Subdivision 8 of Section 11740, places a limitation upon excessive borrowing by bank officers, each dealing with an entirely different subject. (a) If it be necessary to read into Section 3420-5. Subsection 8 of Section 11740, which prohibits bank officers from borrowing in excess of certain amounts, then that part of the act is not embraced within the subject of the act, providing punishment for officers and employees of banks making excessive loans, and the act is unconstitutional. State v. Sloan, 258 Mo. 305; State v. Fulks, 207 Mo. 38; State v. Rawlings, 232 Mo. 556; State v. Coffee & Tea Co., 171 Mo. 634; St. Louis v. Wortman, 213 Mo. 131; State v. Persinger, 76 Mo. 346; St. Louis v. Weitzel, 130 Mo. 616; State v. Burgdoerfer, 107 Mo. 19. (b) Subsection 8 of Section 11740 is an inhibition against borrowing in excess of certain amounts, while Section 3420-5, Laws 1925, prohibits officers from making excessive loans. "Lend" is synonymous with the term "to make a loan," but not with "borrow." (2) Respondent contends that the trial court did not err in sustaining his motion to quash the information, because the information failed to charge respondent with any offense under the laws of this State. (a) Section 3420-5, sets out every element of the offense against which the statute is directed, except the amounts, for which reference is made to Section 11740. (b) The gravamen of the offense designated in Section 3420-5 is in the making or concurring in the making a loan to any individual, partnership or corporation in excess of the amounts limited by law in Subsection 1 of Section 11740, and a comparison of the language used in Section 3420-5 with the almost identical language used in Subsection 1 of Section 11740 shows that the amounts referred to in Section 3420-5 must refer to the amounts set out in said Subsection 1, which prohibits a bank from making a loan to individuals, partnerships or corporations, the same classes mentioned in Section 3420-5. The city of Kennett having a population of less than five thousand, twenty-five per cent was the limit the bank could loan. State v. Kruger, 134 Mo. 362; State v. Schuchman, 133 Mo. 117; Loan & Trust Co. v. Swimmer, 208 Mo. App. 503; Tucker v. Railroad, 208 Mo. 51; State v. Jaeger, 63 Mo. 403. (c) If it be held that the amount be set out in Subsection 8 of Section 11740 (which does not impose a restriction upon making loans, but places an inhibition against borrowing) is incorporated in Section 3420-5, then only the amount set forth therein can be considered, and not the whole statute. By no rule of construction can that part of the statute, "without the consent of a majority of the directors of the bank, other than the borrower, first having been obtained in a meeting of the board, said consent to be made a matter of record before the loan is made," be read into and made a part of Section 3420-5 by mere reference to the amount alone. A criminal offense cannot be created in such a vague and uncertain manner. State v. Jaeger, 63 Mo. 409; State v. Reed, 125 Mo. 48; State v. Bartley, 263 S.W. 96; State v. Kelsey, 89 Mo. 623; State v. Butler, 178 Mo. 320; State v. Bellerton, 295 S.W. 545; State v. Owens, 268 Mo. 484; Lock v. Reis, 274 S.W. 832; Castilo v. Highway Commission, 279 S.W. 676; Bradley v. State, 10 A.L.R. 1131; 25 R.C.L. 1081, sec. 301; 36 Cyc. 1152, 1186; Southerland on Stat. Const. (Ed. 1891) sec. 257, p. 337; Jones v. Dexter, 8 Fla. 270; Matthews v. Sands, 29 Ala. 136; State v. Davis, 22 La. Ann. 77. (d) The amounts referred to in Section 3420-5 must refer to the amounts set out in Subsection 1 of Section 11740 (the only part of the section limiting the amount a bank can lend to any individual, partnership or corporation), or each of the nine subsections of 11740, and each subdivision of said subsection, containing a stated amount, would become adopted by reference into Section 3420-5, which would manifestly be contrary to the intent of the Legislature, create a multitude of offenses by slight implication and lead to absurd results. State v. Bartley, 263 S.W. 96; State v. Butler, 178 Mo. 320; State v. Owens, 268 Mo. 484; 25 R.C.L. 1081, sec. 301; 36 Cyc. 1152 (V); 1185-6. (e) That the Legislature intended to make it a crime to lend to any director, who is classed as an individual in Section 3420-5, more than twenty-five per cent of capital and surplus of the bank (Kennett having less than five thousand people), is made clear by its subsequent action in repealing Subsection 8 of Section 11740 and by enacting a new section, Laws 1927, p. 216, and Subsection 8 at page 226, in placing the "director" in the same class as the "individual." Laws 1927, pp. 216, 226; 36 Cyc. 1147 (11). Respondent concedes that the repeal of Subsection 8 of Section 11740 does not alone render the information void, if otherwise good.

DAVIS, C.

During the October term, 1926, the grand jury of Dunklin County returned an indictment charging defendant, a director of the Citizens Savings Bank, on or about December 29, 1925, with making a loan of the funds of said bank to defendant in excess of ten per centum of the capital and surplus of said bank without the consent of a majority of the directors of said bank, other than the borrower, first having been obtained in a meeting of said board of directors and recorded upon the minutes of said board. Upon the indictment being held insufficient by the court, the prosecuting attorney substituted and filed an information. To an amended information filed in the Stoddard Circuit Court on change of venue, the defendant lodged a motion to quash, which the court sustained, the State appealing from the judgment entered thereon.

Omitting caption and signatures, the amended information reads:

"James V. Billings. Prosecuting Attorney within and for the County of Dunklin, and State of Missouri, upon his oath of office as such prosecuting attorney, and upon his hereto appended oath, and upon his knowledge, information and belief, informs the court and charges that M.W. Lloyd, T. Paul King and W.S. Jones, late of the county aforesaid, on or about the 29th day of December, A.D. 1925, and at divers times since, at the County of Dunklin, State aforesaid, being directors of the Citizens Savings Bank, a corporation duly organized and existing under the laws of the State of Missouri, the same being a banking institution doing business in said County and State, the same being a banking institution then and there with a capital of $50,000, and a surplus of $9500, then and there well knowing that said M.W. Lloyd was then and there a director and an officer of said Bank as aforesaid, did then and there on or about December 29, 1925, wilfully, knowingly, unlawfully, and feloniously make a loan of the funds of the said Citizens Savings Bank, a banking institution, to the said M.W. Lloyd, the same being a certain written instrument whereby a certain obligation of indebtedness was created, to-wit: A promissory note for the payment of money, to-wit: One promissory note dated December 29, 1925, in favor of the said Citizens Savings Bank, for the sum of $10,000, due December 1, 1926, made, executed and delivered to...